Lesson Notes By Weeks and Term v5 - Grade 8

Lesson Video

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Performance objectives

• Define key economic terms and apply them to SA scenarios.
• Explain the three sectors of the South African economy.
• Describe the four factors of production with local examples.
• Analyse the five main functions of a business.
• Differentiate between forms of business ownership in SA.

Lesson summary

This week is dedicated to revising and consolidating the key concepts covered in Economic and Management Sciences (EMS) so far this term. This is crucial for ensuring you have a solid foundation for future topics. Think of it as preparing the ground for a strong building – a good foundation ensures the building (your understanding) doesn't crumble! Understanding these concepts is not just about passing tests; it's about understanding how our economy works, how businesses operate, and how to manage your own money effectively, which are essential skills for all South Africans.

Lesson notes

2.1 Needs and Wants: Needs: These are essential for survival. Without them, we cannot live. Examples include food, water, shelter, and clothing.

Wants: These are things we desire but aren't essential for survival. Examples include a cellphone, a fancy car, or going to the movies.

Scarcity: This is the fundamental economic problem: unlimited wants but limited resources. Because of scarcity, we must make choices.

Opportunity Cost: The value of the next best alternative forgone when making a decision. It's what you give up to get something else.

Example: Let's say you have R

5

0. You can either buy a loaf of bread (a need) or a cool drink and chips (wants). If you choose the cool drink and chips, the opportunity cost is the loaf of bread you didn't buy. In South Africa, many families face difficult choices due to scarcity. For example, they might have to choose between buying electricity and buying food. 2.2 Goods and Services: Goods: Tangible items that satisfy our needs and wants. Examples include a book, a car, or food.

Services: Intangible activities that satisfy our needs and wants. Examples include a haircut, a doctor's visit, or transportation.

Example: A vet providing medical care to an animal is providing a service. The medicine used by the vet is a good. A taxi ride from Soweto to Johannesburg is a service. The taxi itself is a good. 2.3 Sectors of the Economy: Primary Sector: Extracts raw materials from nature.

Examples: Farming, mining, fishing, forestry. In South Africa, this includes gold mining, maize farming, and fishing.

Secondary Sector: Processes raw materials into finished goods.

Examples: Manufacturing, construction. In South Africa, this includes car manufacturing in Port Elizabeth and food processing in Gauteng.

Tertiary Sector: Provides services to individuals and businesses.

Examples: Retail, tourism, education, healthcare, banking. In South Africa, this includes shops like Shoprite, tourism operators in Cape Town, and schools and hospitals throughout the country.

Example: A farmer grows wheat (primary). A bakery uses the wheat to make bread (secondary). A supermarket sells the bread to consumers (tertiary). 2.4 Factors of Production: Land: Natural resources used in production. Includes minerals, water, forests.

Labour: Human effort used in production. Includes skills, knowledge, and effort of workers.

Capital: Man-made resources used in production. Includes machinery, tools, equipment, buildings.

Entrepreneurship: The ability to combine the other factors of production to create goods and services and take risks. Entrepreneurs are innovators and risk-takers.

Example: Consider a small spaza shop in a township.

Land: the land the shop is built on.

Labour: the shop owner and any employees.

Capital: shelves, a cash register, a fridge.

Entrepreneurship: the shop owner's decision to start the business and their ability to manage it. 2.5 Functions of a Business: Purchasing: Buying the necessary goods and services to operate the business. This includes finding suppliers and negotiating prices.

Production: Creating the goods or providing the services the business offers.

Marketing: Promoting and selling the goods or services to customers. This includes advertising, branding, and pricing.

Finance: Managing the money of the business. This includes budgeting, accounting, and securing loans.

Human Resources: Managing the employees of the business. This includes hiring, training, and paying employees.

Example: Consider a restaurant.

Purchasing: buying food ingredients from suppliers.

Production: cooking the meals.

Marketing: advertising the restaurant and its menu.

Finance: paying bills and managing cash flow.

Human Resources: hiring chefs and waiters. 2.6 Forms of Ownership: Sole Trader: A business owned and run by one person. The owner receives all the profits but is also personally liable for all the debts.

Advantages:* Easy to set up, owner keeps all profits.

Disadvantages:* Unlimited liability, difficult to raise capital.

Partnership: A business owned and run by two or more people. The partners share the profits and losses according to their agreement.

Advantages:* More capital than a sole trader, shared workload.

Disadvantages:* Unlimited liability, disagreements can arise.

Company: A business that is legally separate from its owners (shareholders). The company is responsible for its own debts.

Advantages:* Limited liability, easier to raise capital.

Disadvantages:* More complex to set up, higher taxes.

Example: A local hairdresser operating on their own is likely a sole trader. Two doctors opening a medical practice together would form a partnership. A large corporation like MTN is a company.